Michigan Decides 2012: Should our legislature be required to have a supermajority vote to increase taxes? (Proposal 5)

California is often cited as the poster child of gridlock, partly because of its supermajority law. But some say it's due to uncontrolled spending.

Linden Mayor David Lossing, pictured at the podium in a file photo, says of Prop 5: "It would put everything back on local units of government to try and do corrective behavior to protect the health, safety and welfare of residents in our communities around the state.”File Photo | The Flint Journal

Editor's note: Michigan Decides 2012 is a six-week series in which MLive will explore the half dozen proposals facing Michigan voters on the Nov. 6 ballot. We kicked it off last week with Proposal 1, a referendum on Public Act 4.

LANSING, MI - Michigan would join a minority of states requiring a “supermajority” of state lawmakers to raise state taxes if voters approve a proposed constitutional amendment in November.

Proposal 5 would make it far tougher to raise or alter the mix of state taxes that support schools, roads, prisons, health care and other public services.

No longer would a simple majority vote in the Michigan Legislature do the trick. Two-thirds of lawmakers in both the House and Senate would have to vote in favor of a new state tax, expanding the base of taxation, or increasing a tax rate.

Voters would continue to have authority to increase taxes with a simple majority vote, an option that is now rarely used. Proposal 5 calls for those types of issues to be decided on November ballots only.

Proposal 5 sets a high bar for tax increases that opponents say would lock the state into its current tax structure and make it extremely difficult to adjust to future needs. Michigan has 148 state lawmakers – 38 in the Senate and 110 in the House. Thirteen senators would have the clout to prevent a tax increase supported by other lawmakers in the Legislature, which critics say undermines majority rule democracy.

“This just feeds into way more gridlock at the state level, which is something that we don’t need,” said former state lawmaker Gilda Jacobs, president of the Michigan League for Human Services and a member of an opposition group called Defend Michigan Democracy.

“This ballot proposal could tie the hands of the Legislature for years to come. This puts power into the hands of a superminority.”

A broad range of organizations – from the pro-labor United Auto Workers to the pro-business Michigan Chamber of Commerce – oppose Proposal 5.

Supporters of Proposal 5 say it would force state government to become more efficient, shifting the focus to how money is spent rather than how money is raised.
Supporters say their plan is aimed at keeping more cash in taxpayers’ pockets while making Michigan tax policy more stable and attractive for job providers.

Supporters say the proposal also would ensure there is broad consensus in favor of a tax increase before it is enacted.

“It should be harder to raise taxes than it is to lower them,” said Lana Theis, president of the Michigan Alliance for Prosperity, which sponsors the proposal. “It makes sense that you do that in order to encourage our Legislature to rely on something other than a tax increase as a solution to a problem that they face.”

An estimated 17 states have policies that require a legislative supermajority to raise at least some types of state taxes. Michigan is often listed among them because of a 1994 measure related to state property taxes.

A memo from the Citizens Research Council of Michigan mentions that nine states have broad constitutional requirements for supermajority votes to enact state tax increases of any type. Michigan would join that group if Proposal 5 passes. Two more states have similar requirements contained in state law rather than the constitution.

Defend Michigan Democracy lists 10 states that broadly require some sort of legislative supermajority on tax issues, and notes most of them have higher than average unemployment and lower than average per capita income.

Michigan also fits that description. But opponents of Proposal 5 say its passage could lock the state into that status for decades to come because it would be harder to invest in education and other programs needed to improve the business climate.

Mississippi requires a legislative supermajority and ranked last in per capita personal income in 2011. Nevada had the nation’s highest unemployment rate as of August.

There also are supermajority states with above-average statistics. Delaware has a lower-than-average jobless rate and ranked 20th in per capita income based on preliminary 2011 statistics. South Dakota had a relatively low 4.5 percent jobless rate and ranked 21st in per capita income.

BALLOT PROPOSAL WORDING

Proposal 5: A PROPOSAL TO AMEND THE STATE CONSTITUTION TO LIMIT THE ENACTMENT OF NEW TAXES BY STATE GOVERNMENT

This proposal would:

Require a 2/3 majority vote of the State House and the State Senate, or a statewide vote
of the people at a November election, in order for the State of Michigan to impose new or
additional taxes on taxpayers or expand the base of taxation or increasing the rate of
taxation.

This section shall in no way be construed to limit or modify tax limitations otherwise
created in this Constitution.

Should this proposal be approved? (Yes or No)

California is often pointed to as the poster child of government gridlock and dysfunction in part because of its supermajority tax increase requirements. But some argue California’s problems stem from an inability to control government spending, not necessarily its supermajority requirements.

A goal of supermajority tax policies is to keep taxes low. The Citizens Research Council of Michigan says that “academic research to support the ability to achieve this aim is mixed.”

Opponents worry that supermajority tax policies might cause funding shifts that force taxpayers to pay higher costs in other ways –either through higher states fees or local taxes that would not be subject to the supermajority requirements. A state that can’t raise gas taxes might consider higher driver’s license or vehicle registration fees. In states that can’t boost taxpayer aid to higher education, universities may have higher tuition increases.

“It would put everything back on local units of government to try and do corrective behavior to protect the health, safety and welfare of residents in our communities around the state,” said David Lossing, the mayor of Linden, a city of roughly 4,000 people in Genesee County.

Opponents of the proposal also worry about what a “two-thirds” requirement might do to the state’s bond rating, which in turn could make it more expensive for the state to borrow money.

Republican Gov. Rick Snyder opposes the measure, saying that while it “may sound good, it’s not good public policy.”

The Snyder-backed tax changes of 2011 likely never could have been accomplished had a “two-thirds” measure been in place at the time. The changes scrapped the Michigan Business Tax and generally lowered overall state taxes for many businesses, but raised the bill for some individuals who will pay income tax on pensions and some other forms of retirement income.

Now that the changes have been made, some want to make sure they can’t be easily altered by future governors or legislatures.

“We’re very concerned that although this administration and the Legislature have been very fiscally responsible, there will come a time when that will change” with future administrations or legislatures, said Charles Owens of Michigan’s National Federation of Independent Business chapter. NFIB has endorsed Proposal 5.

Diane Dearing, owner of Display Structures Inc. in Troy, is receptive to a plan that could limit that tax bill for her small business that specializes in metal fabricating.

“If we can rein in and put a very tangible limit on how much in taxes we pay, that helps us a lot,” she said. “It goes a long way toward allowing businesses to thrive.”

Michigan Alliance for Prosperity received nearly all of its startup money – roughly $2 million – through a company affiliated with the Moroun family, owners of the Ambassador Bridge. Defend Michigan Democracy says Proposal 5 is not backed by a true “alliance” but rather is an attempt by Moroun businesses and conservative tax organizations to “hijack” the state constitution.

Theis says that many of the organizations opposing Proposal 5 “rely on some type of government funding in order to succeed and they want easy access to the average Michigan taxpayers’ pockets.”

Defend Michigan Democracy has members or supporters including the Michigan Health and Hospital Association, the Michigan League for Human Services, AARP of Michigan, the Michigan Education Association and the Michigan Infrastructure and Transportation Association.